Eric Gustafson’s story is a great example of how the very best exit planning isn’t really a plan at all – it’s just a continuation of good business practice.
Eric ran a tight ship, so when all of the stars aligned to make it the right time for a sale, the business was ready for it and the process of sale was a synch. Listen to his story or read the highlights to find out how he did it…
There was a huge blizzard that brought Minneapolis to a standstill for a month and almost bankrupted his printing business early on in its life. Thankfully things picked up in the following month and they survived, and then it wasn’t long before monthly profits of $40,000 per month became $200,000 per month.
By getting a hold of the data within the company and using it to empower the sales team. They implemented what was referred to as a “Telemagic system” back then, which was essentially the CRM system of its day.
The marketplace was changing. Margins were going down and more customers were doing their printing in-house.
Eric used a personal contact who had raised private equity to buy two of his friends’ businesses, so he knew that throughout negotiations he was dealing with someone he could trust. Eric and the rest of his ownership team didn’t have a dollar amount in mind – the valuation was quite simply a fair multiple of easily agreeable figures.
“A fair multiple is only fair if you put the time in to build the value of your company!”
Almost nothing needed to change. The company had been following good habits for a long time, running their financials every month in the proper way. The company benefited greatly from their advisory board which was made up of experienced heads from different industries. These were paid positions, but the range of experience around the table combined with their ability to speak more freely than an internal board of directors made it a very good investment.
The idea to sell came about two years before the ultimate sale, but because of the quality of the financial data, the due diligence only took two weeks!
Very well indeed because in his words “I didn’t have a skill set, so I wasn’t emotionally invested”. Because Eric had no background in printing and from the outset hired capable staff to handle the most challenging day-to-day tasks, he could easily walk away.
The E Myth: Why Most Businesses Don’t Work and What to Do About It
“it’s good to deal with people you trust”
“your business is worth more if you’re not involved”
“you can have your cake and eat it too, but it doesn’t just happen”
“pretend you’re outside of your business for a year… how would it run?”
Phone: 612-239-7833
Email: [email protected]
QUARTERLY ECONOMIC AND M&A MARKET UPDATE There’s a lot going on in the world today that could make a business owner feel anxious and...
If you’re acquiring a business, immediately overhauling the way the company operates is not likely going to be the most effective strategy. Unless the...
Colin Engstrom is my guest today. Colin is the former owner of a Bozeman, Montana commercial cleaning company. He bought the company off of...